A unexpected bond rally sweeps over India
Published On: Monday, September 6, 2021 | By: Team KnowMyStock
A rally in India’s sovereign bonds, fueled by mutual funds and overseas investors has left most Mumbai traders baffled at their sudden fortune. Yields dropped across the curve last week, with those on the benchmark 10-year bond declining ten basis points, the biggest weekly drop since April. Government debt auctions are finding buyers again, after a spate of earlier sales were canceled or rescued by underwriters. A rally in India’s sovereign bonds, fueled by mutual funds and overseas investors after weeks of indifference, has left most Mumbai traders baffled at their sudden fortune. Mutual funds turned net buyers with purchases of 151 billion rupees ($2.1 billion) of debt over the last 10 trading days.
Overseas investors picked up 28.2 billion rupees of bonds under the so-called Fully Accessible Route, where there are no caps on foreign purchases, and 15.2 billion rupees under the general category since the last week of August. A special route for long-term foreign investors called the Voluntary Retention Route, also suddenly saw all its 906 billion rupee quota taken up.
It is likely that comments by Federal Reserve Chair Jerome Powell at Jackson Hole reassured global investors that the U.S. central bank would be gradual in removing stimulus. That has boosted risk sentiment globally.
According to analysts the GDP numbers triggered the change in sentiment and show RBI will continue with its extended accommodative stance.
We are on Telegram!
JOIN our telegram channel to receive updates on Financial News and Stock and FNO Tips.
Click Here!
Follow Us On:
